Property Editor for The Age

A NEW payment management system for the construction sector to be launched early next year claims to eliminate unforeseen cost variations, an issue that has long plagued the industry.

Local legal firm Minter Ellison and joint venture partner US-based Textura Corporation will roll out an Australian version of Textura's contractor claims processing system in January. The web-based system aims to replace paper invoicing from individual contractors - which much of the local industry still relies on - with electronic management of payments.

About one-third of the commercial construction sector in North America uses Textura's system, the company claims.

On Australian sites, many contractors submit their progress claims on a monthly basis on paper to the head contractor. Those invoices are then manually uploaded, cross-checked and approved or rejected.

Not only was this process time-consuming but it could also lead to a lack of transparency about supplementary claims and unforeseen cost variations for the developer or owner of the project, Minter Ellison said.

Under the web-based system, the submission, receipt, amendment and approval of progress claims and supplementary claims and variations was streamlined.

A subcontractor entered their progress claim online and it was sent to the client, usually the head contractor or developer, who assessed it. Once the claim was approved, the system generated a certificate and schedule, which went back to the subcontractor. The approved invoices and payments were then passed back to the client's accounting system and entered as a liability.

Barwon Water's capital projects manager, Paul Northey, said his organisation was keen to implement a standardised process to track payments for $170 million worth of capital projects and ensure they complied with the Security of Payment Act and bank guarantees.

''It [the new system] is something we're giving consideration to at the moment,'' he said.